IBM misses sales forecasts by $1 billion

IBM released third-quarter results Wednesday that missed sales forecasts by over $1 billion, as the company's hardware business took a hit from the transition to the cloud.

The hardware division, which produces servers and mainframes, lost $167 million in the third quarter, after earning $124 million a year prior. With customers increasingly relying on cloud storage from the likes of Amazon(AMZN) and others, fewer need storage infrastructure of their own.

IBM's own cloud revenue was a bright spot, rising 70% so far this year. But the company took a hit in its Asia-Pacific sales, which fell 15% versus a year ago amid the slowdown in China and the weakening of the Japanese yen.

Overall, IBM(IBM) reported net income of $4.4 billion, or $3.99 a share, which came in ahead of estimates. But sales, at $23.7 billion, fell short of the $24.8 billion predicted by analysts, and shares sank nearly 6% in after-hours trading.

In spite of the struggles last quarter, IBM reaffirmed its guidance for this year and said it remains on track to meet its goal of earning at least $20 a share in 2015.

"We are taking action to improve execution in our growth markets unit and in the elements of our hardware businesses that are underperforming," IBM CEO Ginni Rometty said in a statement.